SoCs Are Silver Lining in Nvidia's Strong Q3

SAN FRANCISCO, Calif. -- Tegra 4, Nvidia Corp's new SoC processor, gave the graphics chip maker a quarterly boost in the third quarter. Revenue was up 7.9 percent from $977.2 million in the second quarter to $1,054 million in the third quarter, but remained down 12.5 percent year over year, announced the company in its third-quarter results presentation on Thursday, November 7. Nvidia's Tegra processor business alone brought in $111.2 million third-quarter revenue, representing a 111.4 percent rise over the second quarter, yet Tegra also remains down 54.4 percent year over year.

System on chip Tegra 4 went into volume shipments in the third quarter. "The sequential increase is largely related to Tegra 4," the company says in its earnings statement. Landing in China's Xiaomi Mi3 smartphone and mobile tablet Tegra Note, Tegra 4 was first introduced in SHIELD, Nvidia's handheld gaming device, which started shipping in volume in the third quarter with Tegra 4 inside. Nvidia also saw increased sales in embedded and automotive SoC products sequentially, though only automotive sustained the year-over-year increase, accounting for 25 percent of Tegra 4 revenues. The company attributed the year-over-year decrease in SoC to lower volume shipments of Tegra 4 versus Tegra 3.

"Tegra 4 shipped in over 15 different mobile devices including Xiaomi, HP, Microsoft, Asus, Toshiba, Acer, and others,"
said Rob Csongor Nvidia's vice president of investor relations in an earnings conference call. "Android devices with Tegra this quarter included Asus’s new 2500 by 1600 transformer convertible tablet, three new HP tablets and new Acer all-in-one PC, ViewSonic’s new Android intelligent display, and a number of Android microgame consoles."

Nvidia expects sales in automotive to increase. "From digital clusters to infotainment systems to, in the future, driver assistance, the car is going to be an opportunity for more than just one GPU," said Jen-Hsun Huang, Nvidia's president and CEO in the Q&A on the earnings call.

The strength in PC gaming market offset any downward trend of the PC market for Nvidia's GPU chips. Higher-margin products GeForce GTX, Quadro, and Tesla GPUs buoyed the gross margins, which clocked 55.4 percent in the third quarter. Graphic processing units brought in the largest chunk of revenue at $876.8 million for the third quarter, up 2.1 percent from the second quarter. Nvidia reported record revenue on Quadro and Tesla GPUs for servers and workstations, a slight increase in GeForce GPUs for desktop, but a decrease in GeForce GPU notebooks.

"A strong PC gaming market, together with record Quadro and Tesla results and the new type of revenues from Tegra 4 in new Android devices offset declines in mainstream PC units," said Csongor said in an earnings conference call. "While the PC market overall declined 9 percent year-on-year according to Gartner, NVIDIA’s year-to-date overall GP business is up 4 percent versus the same time period."

Tegra 4i, Nvidia's first integrated LTE Tegra processor, is now certified with AT&T. It will ship no later than the second quarter, said Huang in the Q&A. "Tegra 4i projects are in development and that we expect unlikely to be announced in Q1 and ship no later than Q2." Nvidia is targeting the smartphone market outside the US.

"You really need to have CDMA in the US to be successful. And so we are not targeting [the] US with respect to phones, we are targeting outside the US." Huang said.

Susan: I think there needs to be an element of pragrammability there: either uP cores or FPBGA blocks...some flexibility in IO functions...some ADCs and DACs...but defining it as @celeb suggests as SoC being a small computer is probably too narrow...Cisco router ASIC is not a computer neither is Qualcomm based band processors...are these SoCs BTW? Kris

My opinion would be something that can function as an entire computer and run an operating system. Then again, I come from the hobby side. So arduino would not be an SOC, but Raspberry Pi would be since the pi has hdmi out and usb in.